When Clear Water Brings Trust: Water Ecological Civilization Pilots and Corporate Environmental Information Disclosure in China

Abstract

Can ecological civilization pilots improve corporate environmental transparency? This study examines this question using the staggered implementation of China's Water Ecological Civilization Pilot Cities (WECPC) program as a policy shock. Based on A-share listed firms from 2008 to 2023, we employ a difference-in-differences approach to assess its effect on corporate environmental information disclosure quality. The results show that the WECPC program significantly improves disclosure quality, and this finding remains robust across alternative measurements, matching estimations, placebo tests, high-dimensional fixed effects, and count data models. Mechanism tests indicate that the policy works by strengthening corporate environmental emphasis, increasing investor attention, and alleviating financing constraints. Heterogeneity analyses further show that the effect is stronger among firms with higher green narrative capacity, state-owned enterprises, high-technology firms, and firms located in regions with greater emphasis on green transition. This study provides firm-level evidence on how ecological governance pilots enhance environmental transparency and offers implications for improving environmental disclosure systems and modernizing environmental governance.